Article Highlights: Pay-as-You-Earn System Safe Harbor Payments Situations Triggering Underpayments True Safe Harbors Congress considers our tax system a “pay-as-you-earn” system. To facilitate that concept, the government has provided several means of assisting taxpayers in meeting the “pay-as-you-earn” requirement. These include: Payroll withholding for employees; Pension withholding for retirees; and Estimated tax payments for self-employed […]

Avoiding IRS Underpayment Penalties

Article Highlights: Standard Deductions Itemized Deductions Bunching Strategy Medical Expenses Taxes Charitable Contributions The changes in the 2017 Tax Cuts and Jobs Act (TCJA) included nearly doubling the standard deduction and placing limitations on or suspending certain itemized deductions, effective for tax years 2018 through 2025. The new standard deduction amounts for 2018 were $12,000 […]

Are You a Candidate for Bunching?

Article Highlights: Underpayment of Estimated Tax and Withholding Penalty Required Minimum Distribution Penalty Late-Filing Penalty Late-Payment Penalty Negligence Penalty Fraud Penalty Dishonored Check Penalty Missing ID Number Penalty Early Withdrawal Penalty Penalty for Failure to Report Tips Foreign Reporting Excessive Claim Penalty Accuracy-Related Penalty for Non-itemizers Frivolous Return Penalty Penalty for Failure to File Information […]

Watch Out for Tax Penalties

Article Highlights: Tax Compliance Hard-to-Trace Income Sources Two-Tiered Compliance Bank Transaction Reporting Threshold Tax-compliance rates in the United States are based, in large part, on how taxpayers accrue income. Those who receive income that is reported by a third-party source, such as wage earners, exhibit near-perfect compliance rates on their salaries – since the payer […]

Biden Administration Backs Off on Proposed Bank Transaction Threshold

Article Highlights: Taking Stock of Tax Strategies Education Tax Credits Converting a Traditional IRA to a Roth IRA Minimum Required Distributions Charitable Contributions Qualified Charitable Distributions Health Savings Accounts Prepaying State Taxes Paying Medical/Dental Bills Gifting Avoiding Underpayment Penalties It seems hard to believe, but the holiday season is almost upon us, and that means […]

10 Tax-Saving Strategies to Consider Before Year-End

There’s an old saying about not trying to pack your parachute after you’ve already stepped off the plane. In other words, it’s generally not a good idea to delay some action or decision until you’re already in the middle of it. Take the Paycheck Protection Program (PPP). The forgiveness provision is perhaps its most compelling […]

Have a Paycheck Protection Program Loan? What to Know About PPP Loan Forgiveness [Updated]

There’s an old saying that there is no exception to the rule that every rule has an exception. Think about it. The general tax rule for debt forgiveness states that the amount of debt forgiven is subject to federal income tax. PPP loan forgiveness is an exception, although from an overall tax perspective it didn’t start […]

Have a Forgiven Paycheck Protection Program (PPP) Loan? Understand The Tax Rules for PPP Loan Forgiveness

Article Highlights: New Business Tax Break Restaurant Purchased Meals Qualifying Restaurants Take-out Meals Lavish Limitations Taxpayer Presence Substantiation Congress has provided businesses with a temporary tax break as a means of helping the restaurant industry, which has been devastated by the COVID pandemic. Although the Tax Cuts and Jobs Act eliminated the business deduction for […]

Restaurants and Businesses Benefit from Temporary Tax Break